A company has Sales of $200,000, Operating Profit (EBIT) of $12,000, Interest Expense of $6,000 and a Tax rate of 33.3%. It has Total Assets of $200,000, Current Liabilities of $25,000, Long Term Debt of $100,000 and Common Stock outstanding of $70,000. Retained earnings is $5,000. The company pays NO dividends and we will consider there is NO cost of Equity.

What is the company's; (a) Net Income in dollars, (b) Net Profit Margin, (c) Return on Assets, and (d) Weighted Average Cost of Capital (include current liabilities in your WACC calculation)?

(e) What is the relationship between ROA and WACC? (Economic Value Added)

Answer rating: 100% (QA)

a Net Income E BIT Interest Exp ense Taxes Tax es 12 000 x 33 3 3 996 net income 12 000 6 000 399620... View the full answer